Martin Lewis: Why are energy standing charges so high? What can be done

QrizB

JCollins63 said:

I have a choice of 4 tariffs with British Gas. Why does the standing charge vary on each tariff as well as the unit charge? Is this just to confuse the consumer?

The fixed costs of supplying energy vary by region, and so the standing charge has to vary too.

Spoonie_Turtle

QrizB said:

JCollins63 said:

I have a choice of 4 tariffs with British Gas. Why does the standing charge vary on each tariff as well as the unit charge? Is this just to confuse the consumer?

The fixed costs of supplying energy vary by region, and so the standing charge has to vary too.

Presumably regional differences don't apply here since one customer in one area has a choice of 4 tariffs?


To potentially answer the original question, it could be because the tariffs were started at different times when the standing charges were slightly different on the standard variable at the time, or perhaps to give choice for higher vs lower users (lower users may prefer higher unit rate and lower SC, and higher users vice versa), or both … or some other reason I've not thought of.

QrizB

Spoonie_Turtle said:

QrizB said:

JCollins63 said:

I have a choice of 4 tariffs with British Gas. Why does the standing charge vary on each tariff as well as the unit charge? Is this just to confuse the consumer?

The fixed costs of supplying energy vary by region, and so the standing charge has to vary too.

Presumably regional differences don't apply here since one customer in one area has a choice of 4 tariffs?

Ah, yes, good point!

Spoonie_Turtle said:

To potentially answer the original question, it could be because the tariffs were started at different times when the standing charges were slightly different on the standard variable at the time, or perhaps to give choice for higher vs lower users (lower users may prefer higher unit rate and lower SC, and higher users vice versa), or both … or some other reason I've not thought of.

Also, if the customer has a choice of tariffs, only one of those will be the SVT. The way the SVT cap works, the supplier has few options for tweaking the tariff; if they make the SC lower but increase the unit price, or vice-versa, they violate Ofgem's capping rules.

For other tariffs the supplier has more flexibility in how they price it to cover their costs. They can tweak the SC and the unit price up and down to attract particular sorts of customer.

stripling

National Grid
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Grannyof5

So British Gas are offering a new fixed price tariff. On initial viewing it looks good but when you look more closely it  states that their offer will always be a £1 lower that the new figures. Bearing in mind the standing charge is going up it seems to me it’s no deal at all, giving it to you in one hand and taking it away with the other ! 

bristolleedsfan

Tomato Energy flat rate E SC IRO 20p per day cheaper for most expensive regions, ( South Scotland + Mersey/N Wales)

Fuse Energy offer discounted E standing charge.

Outfox The Market currently cheapest 12 month fix no exit fees also significantly cheaper SC dual fuel

masonic

Looks like some are going to get hit even harder come April, new price cap data now available at https://www.ofgem.gov.uk/information-consumers/energy-advice-households/get-energy-price-cap-standing-charges-and-unit-rates-region SC breaches 70p in one region...

Unless of course suppliers start competing with each other rather than using the cap as a target.

peter3hg

masonic said:

Looks like some are going to get hit even harder come April, new price cap data now available at https://www.ofgem.gov.uk/information-consumers/energy-advice-households/get-energy-price-cap-standing-charges-and-unit-rates-region SC breaches 70p in one region...

Unless of course suppliers start competing with each other rather than using the cap as a target.

Big disparity between the regions. For the North West it has actually fallen slightly whereas at the other end of the scale Southern have a nearly 27% increase.
Suggests there may be some methodology or calculation change 

Novice_investor101

I’m in Yorkshire & just saw the details of the new Price Cap. I’m now spending £30 a month just on standing charges. £361 a year. That’s £5 a month more than under the current cap. Prior to the huge increases in costs my direct debit of £50pm covered my SC & usage for both gas & electricity. No wonder people can’t afford to eat….

I’m against putting up standing charges, it’s exacerbating fuel poverty when people are doing their best to cut usage & save money, then they get smacked with this. There’s only so much people can absorb. 

tghe-retford

I think we may be reaching the point where for electric, the standing charge is becoming the larger slice of the bill for very low users and close to equilibrium for low energy users in the Northern region.

It reminds me of line rental in the 2010s where it was increasing rapidly to the point where two thirds of the phone/broadband bill was just the line rental charge.